According to a study released Friday by the Bureau of Labor Statistics, producer prices grew by a blazing 10 percent for the year ending in February, the largest increase on record for the sector.
Today’s producer price inflation hit 10%. Fed needs to get serious about inflation, says @mickeylevy. @GWUEconomics students, you should all read this—and anyone else who wants the facts about inflation. @ManhattanInst https://t.co/dovMXumTEt
— Diana Furchtgott-Roth (@DFR_Economics) March 15, 2022
The producer pricing index report released on Tuesday showed inflation increased by 0.2 percentage points from the previous month, marking the highest pace in the gauge’s 11-year existence.
Inflation, Inflation, Inflation
The news released on Tuesday indicates greater hardship may befall households in the future.
Consumer prices are influenced by the wholesale pricing of goods, which is then passed on to consumers through the producer price index (PPI).
JUST IN – US producer price inflation surges to 10% in February, the highest annual increase on record.
— Disclose.tv (@disclosetv) March 15, 2022
A study for February revealed consumer prices rose by 7.9 percent, the fastest annual rate of increase in more than four decades, in just a few days.
President Biden’s political standing has been harmed by the high rate of inflation, which also undermined support for his spending promises.
Oxford Economics economists stated, “inflation in the pipeline is exhibiting few indications of decelerating in the near future, especially while the Russia-Ukraine war takes a toll on energy and other commodity markets.”
“Higher input costs will keep producer prices stubbornly elevated.”
“Profit margins squeezed in the coming months, presumably feeding rising consumer prices in the coming months until war tensions subside and goods demand begins to decline,” the experts warn.
FOMC Meeting and the Ukraine Conflict
A day before the Federal Reserve’s Federal Open Market Committee concludes its two-day meeting (at which it is likely to announce the first interest rate rises in years), the reading on Tuesday comes into effect.
Following the outbreak of the epidemic, which started more than two years ago, the central bank took extraordinary steps to loosen monetary policy.
In addition to lowering its interest rate target to zero, the central bank purchased enormous quantities of government bonds.
Now, the monetary authority is attempting to bring inflation under control by reversing such programs.
In March, some Fed watchers predicted the monetary policy committee would raise interest rates by half a percentage point, rather than the usual quarter percentage point. This prediction came true.
Fed Chairman Jerome Powell signaled during recent congressional testimony the rate hike would likely be simply a quarter-point increase straight out of the gate; this would have been the first time the Fed made such a drastic step in more than two decades.
Further complicating the issue is the Russian-led conflict in Ukraine, which pushed gas prices soaring to their highest levels in American history and contributed to the country’s rising inflation rate.
The question now on everyone’s mind is, “when would the inflation stop?”
Are Americans going to wait and suffer high prices, particularly gas, until Russia decides to end their quest? The Biden administration has to brace up and start taking decisive actions that will help the citizens of this country.